The present invention relates to the purchase and sale of electric power. More specifically, the present invention relates to methods and systems for the management of a bulk electric power market. In particular, the present invention provides methods and systems for use by an Independent System Operator (ISO), a Regional Transmission Organization, or other manager of a bulk electric power market to manage the bulk electric power market for a large region.
Previously, utility companies were vertically integrated. Vertically integrated utilities are those that operate independently of one another, are not connected and serve a native load. These are the companies that generated and delivered electricity to the consumer. Vertically integrated utilities typically provide the following services: generation (the production of electricity), transmission (the transport of electricity to substations), and distribution (the delivery of electricity to homes and businesses).
In November of 1965, the northeast region of the United States incurred a substantial blackout, now commonly referred to as the Great Northeast Blackout. A great portion of the Northeast region was left without power, which affected over 30-million people. Power was out in some areas for over 13 hours.
The Great Northeast Blackout was a turning point for the electricity industry, especially in New England. After the Great Northeast Blackout, the vertically integrated utility companies began discussions about connecting to one another to ensure a more reliable electric generation and delivery system. As a result, the “power pool” concept was developed in each of New England, New York and the Mid-Atlantic States. The New England Power Pool (NEPOOL) was officially organized in November of 1971.
With the organization of NEPOOL, a majority of New England investor-owned and municipal utilities formally joined together to increase reliability of electricity delivery by building a regional grid. By ending the era of the unconnected utility company, NEPOOL improved the reliability of electricity delivery and accrued savings that were passed on to the consumer. At that time New England's grid was composed of approximately 330 generating units connected by over 8,000 miles of high voltage transmission lines. No region-wide blackout has occurred on the bulk power grid since NEPOOL's inception.
In 1996, the Federal Energy Regulatory Commission (FERC) issued Orders 888 and 889 in response to the Energy Policy Act requirements and removed obstacles to competition in the wholesale trade of electricity, bringing more efficient, lower-cost electricity to customers across the country. FERC's main objective was to open the transmission systems to fair and non-discriminatory access, providing a fair transition to competitive bulk power markets while maintaining overall reliability of the system.
NEPOOL interpreted Orders 888 and 889 and proposed an independent system operator (ISO) for New England. The ISO concept was developed by the FERC as part of the framework to support the deregulation of the $200 billion electric industry in the United States. The ISO concept provides a neutral entity responsible for the management of the bulk electric power system, a transmission reservation system known as OASIS (Open Access Sametime Information System), and a wholesale electricity marketplace. The FERC envisioned the establishment of several regional ISO's across the country, all of which would be approved and regulated by FERC. FERC stated its principles for ISO operation and governance in Order 888. These principles include: providing independent, open and fair access to the region's transmission system; establishing a non-discriminatory governance structure; facilitating market-based wholesale electric rates; and ensuring the efficient management and reliable operation of the bulk power system.
The ISO concept has been implemented across the country, primarily in areas where deregulation has progressed significantly. ISO New England, established as a not-for-profit, non-stock corporation on Jul. 1, 1997, achieved regional transmission organization (RTO) status on Feb. 1, 2005. FERC introduced the concept of RTOs in its Order 2000 to further promote industry efficiencies and transmission development. As an RTO, ISO New England, as assignee of the present invention, has broader authority over the development of rules that govern the wholesale electricity market, but still maintains the same responsibilities it had as an ISO: day-to-day operation of the bulk power system in New England, administration of the Open Access Transmission tariff and management of a comprehensive regional bulk power planning process.
Introduced in March 2003, New England's current wholesale electricity marketplace uses a locational marginal pricing (LMP) methodology based on eight pricing zones, which are designed to accurately reflect the cost of wholesale electricity in all locations. In addition, the eight LMP zones have two market settlements, day-ahead and real-time. The eight energy pricing zones include one for each of the following states: Connecticut, Maine, New Hampshire, Rhode Island and Vermont, and three for Massachusetts. In 2006, a ninth energy zone will be introduced in Southwest Connecticut, based on system needs.
The New England Power Pool continues as ISO New England's advisory stakeholder group and is a voluntary consortium of electricity companies interested in doing business in New England. Due to state-level legislation to restructure the industry, many of the vertically integrated utilities across New England were required to divest generation assets. The current membership of NEPOOL includes not only vertically integrated and municipal utilities, but also generation companies, transmission and distribution companies, power marketers, end users, and load aggregators. Under the RTO, a sixth sector for alternative energy was added.
It would be advantageous to provide methods and systems for managing the bulk electric power market which are process oriented and integrate the various processes used in an efficient manner. Such a process oriented system would enable faster assimilation of data and quicker adaptation to changing market conditions and requirements. Further, such a process oriented system would enable stronger customer focus and responsiveness to customer needs. Effective communication and knowledge transfer between ISO departments would be facilitated by such process oriented methods and systems.
The methods and systems of the present invention provide the foregoing and other advantages.